IN THE CIRCUIT COURT OF TALLADEGA COUNTY, ALABAMA
FIRST FEDERAL OF THE *
SOUTH, *
*
Plaintiff, *
*
v. * CIVIL ACTION NO. CV-2001-0722
*
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., *
et al., *
*
Defendants. *
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") made and entered into between
FIRST FEDERAL OF THE SOUTH ("First Federal"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ PROPERTIES & RESOURCES, LP, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
AUTOMATIC GAS & APPLIANCE CO., INC. (jointly "Released Entities").
WHEREAS, there is currently pending in the Circuit Court of Talladega
County, Alabama a civil lawsuit between First Federal and certain of the
Released Entities captioned FIRST FEDERAL OF THE SOUTH V. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇ PROPERTIES & RESOURCES, LP, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND AUTOMATIC GAS &
APPLIANCE CO., Civil Action No. CV-2001-0722, (hereinafter referred to as
"Litigation"); and
WHEREAS, the Released Entities deny any and all liability of the
claims asserted or made by First Federal in the Litigation, with the exception
of those claims relating to the amounts owing to First Federal under the
Original Note and Renewal Note by the signatories thereto (as such terms are
defined in the Complaint filed in the Litigation); and
WHEREAS, this Agreement is entered into by First Federal and the
Released Entities to avoid expensive and time-consuming litigation and appeals
and to compromise, settle, and resolve all claims and disputes between the
parties; and
WHEREAS, this Agreement is not to be construed as an admission of
fault or liability of the Released Entities, or any one or more of them, with
respect to any claims (other than under the Original Note and Renewal Note by
the signatories thereto) made or asserted in the Litigation; and
WHEREAS, First Federal and the Released Entities now wish to document
the compromise, settlement and satisfaction of certain claims which all parties
to the Litigation have or may have against each other, including claims which
were made in the Litigation.
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings set forth in this Agreement and for such other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
First Federal and the Released Entities hereby agree as follows:
1. CONSIDERATION:
A. Concurrently upon the execution of this Agreement,
each Released Entity, except ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., will sign a separate Consent
Judgment (in substantially the form as Exhibit "A" hereto) (the "Consent
Judgment"), whereby each agrees to a consent judgment against that entity and
in favor of First Federal in the sum of SEVEN HUNDRED SIXTY-ONE THOUSAND AND
NO/100 ($761,000.00) DOLLARS. However, First Federal agrees that it will not
file the executed Consent Judgments except as specifically provided herein
below.
B. Concurrently upon the execution of this Agreement,
Automatic Gas & Appliance Co., Inc. will execute a Promissory Note (in
substantially the form as Exhibit "B" hereto) (the "Promissory Note") in the
principal amount of SEVEN HUNDRED SIXTY-ONE THOUSAND AND NO/100 ($761,000.00)
DOLLARS, which Note can be fully satisfied if the "Settlement Amount" is paid
to First Federal within sixty (60) days from the date the last signatory to the
document executes this document.
C. Concurrently upon the execution of this Agreement,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇
Properties & Resources, LP shall
2
each sign an Unconditional Personal Guaranty of payment (in substantially the
form as Exhibit "C" attached hereto) (the "Unconditional Personal Guaranties")
of the Promissory Note executed by Automatic Gas & Appliance, Inc.
D. If, within sixty (60) days following the execution
of this Agreement by the last signatory to this document, one or more of the
Released Entities shall pay, or cause to be paid, to First Federal the
Settlement Amount, as defined in paragraph 1(F), and so long as those Released
Entities which have paid the Settlement Amount have not become a debtor in any
proceedings in bankruptcy or reorganization within the ninety-one (91) day
period immediately following the completion of such payment of the Settlement
Amount to First Federal, then following the payment of the Settlement Amount
and the expiration of said ninety-one (91) day period, First Federal will take
the following action:
1. Automatic Gas & Appliance Co., Inc.'s
Promissory Note shall be deemed, and marked, fully satisfied;
2. The Unconditional Personal Guaranties of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇
Properties & Resources, LP shall be deemed and marked fully satisfied;
3. First Federal will destroy the unfiled
Consent Judgments referred to above; and
4. First Federal will file a dismissal of the
Litigation. The dismissal shall be without prejudice. All parties acknowledge
that one or more Released Entities may have notes and/or mortgages with First
Federal, on which they, or any one or more of them, appear as maker, endorser
or guarantor (other than the Original Note and Renewal Note referenced in the
Complaint in the above-styled cause), and that the rights and liabilities
thereunder are not affected by this Agreement.
5. First Federal will, for itself as well its
respective successors, assigns, predecessors, or affiliated corporations,
release each Released Entity, its agents, servants, directors, officers,
employees and attorneys, it successors or affiliated corporations,
3
from any and all claims contained in the complaint as well as all claims
against a Released Entity about which First Federal is presently aware,
provided however, claims about which First Federal is not aware at the time of
the execution of this Agreement and any claims which may currently exist or
which may, in the future, arise with respect to any and all other notes and/or
mortgages with First Federal, on which any Released Entity ever appears as a
maker, endorser or guarantor (other than the Original Note and Renewal Note
referenced in the Complaint in the above-styled cause and the Promissory Note
referenced in paragraph 1B of this Agreement) will not be released; provided
further, however, that notwithstanding anything to the contrary contained
herein, all obligations of the Released Entities to First Federal shall be
automatically reinstated if for any reason any payment by or on behalf of the
Released Entities to First Federal is rescinded or must be otherwise restored
by First Federal, whether as a result of any proceedings in bankruptcy or
reorganization, or otherwise, and the Released Parties jointly and severally
agree that they will indemnify First Federal on demand for all reasonable costs
and expenses (including, without limitation, reasonable fees and disbursements
of legal counsel) incurred by First Federal in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
E. If the Released Entities fail to pay to First
Federal the Settlement Amount within sixty (60) days following the execution of
this Agreement by the last signatory to sign, or if one or more of the Released
Entities which have paid the Settlement Amount have become a debtor in any
proceedings in bankruptcy or reorganization within the ninety-one (91) day
period following the completion of such payment of the Settlement Amount to
First Federal, then:
1. First Federal will be entitled to
immediately file in the Litigation any or all of the Consent Judgments executed
by any entity or entities it chooses, and shall be permitted to seek collection
thereon;
4
2. First Federal will be entitled to
immediately pursue all legal remedies available to it on the Promissory Note;
3. First Federal will be entitled to
immediately pursue all legal remedies available to it on the Unconditional
Personal Guaranties; and
4. First Federal will be entitled to pursue
any additional claims or remedies presented in the Litigation.
The parties agree, however, that if the terms of this subparagraph (E)
come into effect, then any monies which are actually paid to First Federal by
the Released Entitles within sixty (60) days of the execution of this Agreement
by the last signatory shall serve as an offset toward the damages and amounts
First Federal is entitled to collect and recover under the Promissory Note
referenced in subparagraphs (1), (2) and (3) immediately above, or in the
Litigation.
F. The "Settlement Amount" may be determined at any
time during the 60-day payment period by the sum of four amounts, to-wit: the
"Principal Payoff", the "Accrued Interest", the "Late Fee" and "The General
Damages".
1. The Principal Payoff will not change during
times pertinent to this Agreement and is in the amount of SIX HUNDRED
FORTY-SEVEN THOUSAND TWO HUNDRED SIXTY-NINE AND 71/00 ($647,269.71) DOLLARS.
2. The Accrued Interest reflects interest due
on the Principal prior to November 9, 2001 in the amount of TWELVE THOUSAND
THREE HUNDRED EIGHTY-FOUR AND 01/00 ($12,384.01) DOLLARS, plus interest due in
the amount of ONE HUNDRED SIX AND 40/00 ($106.40) DOLLARS per day between
November 9, 2001 and the date on which the Principal Payoff is paid and
therefore the Accrued Interest may be determined by multiplying the number of
days between November 9, 2001 and the date on which the Principal is paid by
the sum of ONE HUNDRED SIX AND 40/00 ($106.40) DOLLARS and adding to the
product the sum of TWELVE THOUSAND THREE HUNDRED EIGHTY-FOUR AND 01/00
($12,384.01) DOLLARS.
5
3. The Late Fee is subject to change depending
upon the date on which the Principal Payoff amount is paid as follows:
(a) If the Principal Payoff amount is
paid before July 15, 2002 then the Late Fee is in the amount of ONE THOUSAND
THREE HUNDRED TWENTY THREE and 32/100 ($1323.32) DOLLARS.
(b) At 12:01 a.m. on July 15, 2002 the
Late Fee shall become ONE THOUSAND FOUR HUNDRED EIGHTY-TWO AND 92/00
($1,482.92) DOLLARS and will remain that amount until July 15, 2002.
(c) At 12:01 a.m. on August 15, 2002
the Late Fee will increase to ONE THOUSAND SIX HUNDRED FORTY TWO and 52/100
($1,642.52) DOLLARS and will remain that amount until September 15, 2002.
4. The General Damages will not change during
times pertinent to this Agreement and are in the amount of SEVENTY THOUSAND AND
NO/00 ($70,000.00) DOLLARS.
2. GENERAL RELEASE:
The Released Entities, for themselves as well as their respective
heirs, successors, assigns, predecessors, successors, subsidiaries or
affiliated corporations, do hereby each release First Federal, its agents,
servants, directors, officers, employees, and attorneys, its successors or
affiliated corporations and independent contractors with whom First Federal has
conferred regarding the subjects referenced in the above-captioned matter, from
any and all past, present or future claims, actions, rights or benefits of
whatever kind, nature or description which any of the Released Entities have or
may each have against First Federal because of or on account of any and all
damages, claims, causes of action, demands or losses, whether known or unknown,
whether developed or undeveloped and whether based on federal or state statute,
tort, contract or other basis, including all claims for attorneys' fees and
expenses which are based on any facts, transactions or occurrences
6
from the beginning of time through and including the date this General Release
is executed by the Released Entities.
3. ACKNOWLEDGMENT:
A. First Federal and each Released Entity warrants and
acknowledges that the execution of this Agreement, including the General
Release, is knowing and voluntary and that each party understands this
Agreement, including the General Release set forth above. Each party further
warrants and acknowledges that he does not waive rights or claims that may
arise after the date this Agreement is executed by the last signatory or any
claims for breach of this Agreement, and that the claims waived and released by
this Agreement have been waived and released in exchange for consideration in
addition to anything of value to which any Released Entity is already entitled.
First Federal and each Released Entity further acknowledges and warrants that
he/she has been advised to consult with an attorney prior to the execution of
this Agreement, and that he/she has had the opportunity to consult with an
attorney with respect to the terms of this Agreement, including the General
Release contained herein.
B. Each Released Entity acknowledges that state,
federal or other regulators may have jurisdiction over the subject matter or
set of operative facts contained in the complaint in the above-styled cause and
that any action or inaction on the part of such regulator in the past or in the
future will have no effect upon the obligation of the Released Entities to
perform in accordance with the terms of this Settlement Agreement.
4. NO ASSIGNMENT:
First Federal and each Released Entity represent and warrant that as
of the date this Agreement is executed by each that they have not assigned or
transferred or purported to assign or transfer to any person, firm,
corporation, association or entity whatsoever any of the claims being released
herein.
7
5. ENTIRE AGREEMENT:
All parties acknowledge that one or more Released Entity may have
other notes and/or mortgages with First Federal on which they or any one or
more of them appear as maker, endorser or guarantor (other than the Original
Note and Renewal Note referenced in the Complaint in the above-styled cause),
and that the rights and liabilities thereunder are not affected by this
Agreement. Other than that, this Agreement, together with its exhibits,
represents the entire agreement and understanding between First Federal on the
one hand and each Released Entity on the other and all previous discussions,
undertakings, representations, promises, negotiations and agreements with
respect to the matters included in this Agreement are incorporated into this
Agreement and are integrated and are merged herein. Any addition, deletion,
change, amendment or modification of this Agreement must be in writing and
signed by all parties hereto. Any prior representations, promises or covenants
not contained within this Agreement are void and superceded by this Agreement.
6. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with
the laws of the State of Alabama. The parties agree that this Agreement was
prepared by all signatories hereto and their counsel and in case of any
ambiguity shall not be construed more strongly against one than against the
others.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
as indicated below.
------------------------------ ----------------------------------
WITNESS ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Date:
-----------------------------
8
------------------------------ ----------------------------------
WITNESS ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Date:
-----------------------------
------------------------------ ----------------------------------
WITNESS ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date:
-----------------------------
------------------------------ ----------------------------------
WITNESS ▇▇▇▇▇▇ PROPERTIES & RESOURCES
LP by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
General Partner
Date:
-----------------------------
------------------------------ ----------------------------------
WITNESS AUTOMATIC GAS & APPLIANCE CO.,
INC. by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Date:
-----------------------------
FIRST FEDERAL OF THE SOUTH
BY:
------------------------------ -------------------------------
WITNESS ▇▇▇ ▇▇▇▇▇▇▇▇
Date:
-----------------------------
9
EXHIBIT "A"
IN THE CIRCUIT COURT OF TALLADEGA COUNTY, ALABAMA
FIRST FEDERAL OF THE *
SOUTH, *
*
Plaintiff, *
*
v. * CIVIL ACTION NO. CV-2001-0722
*
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., *
et al., *
*
Defendants. *
CONSENT JUDGMENT
I, __________________, do hereby give notice to the court of my
consent for a judgment to be entered against me in this matter in the amount of
$761,000.00 and costs upon the presentation of this instrument to the court by
the plaintiff without any further notice to me prior to the entrance of the
judgment to which I consent.
--------------------------------
Sworn to and subscribed before me on this the _____ day of
________________, 2002.
---------------------------------
Notary Public
EXHIBIT "B"
PROMISSORY NOTE
$761,000.00 June ___, 2002
Sylacauga, Alabama
FOR VALUE RECEIVED, the undersigned, AUTOMATIC GAS & APPLIANCE CO.,
INC., a corporation organized and existing under the laws of the State of
Alabama (hereinafter referred to as "Maker"), promises to pay to the order of
FIRST FEDERAL OF THE SOUTH (together with its successors and assigns,
hereinafter referred to as "Payee"; Payee and any subsequent holder(s) hereof
being hereinafter referred to collectively as "Holder"), at the office of Payee
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
Holder may designate to Maker in writing from time to time, the principal sum
of SEVEN HUNDRED SIXTY ONE THOUSAND and NO/100 DOLLARS ($761,000.00) on or
prior to the date sixty (60) days from the date of this Note (the "Maturity
Date"). The period between the date of this Note and the Maturity Date shall be
known as the "Forbearance Period."
Maker and ▇▇▇▇▇ acknowledge and agree that this Promissory Note is
being executed by Maker as part of that certain Settlement Agreement between
First Federal of the South, on the one hand, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ Properties & Resources, LP, ▇▇▇▇▇▇ ▇▇▇▇▇▇, and
Automatic Gas & Appliance Co, Inc., on the other. As referenced in that
Settlement Agreement, ▇▇▇▇▇'s liability for the $761,000.00 principal amount
provided above may be satisfied if, on or prior to the Maturity Date, Maker
pays to Payee, or causes to be paid to Payee, the following:
The payoff amount during the Forbearance Period, also referred to in
the Settlement Agreement as the "Settlement Amount," may be determined at any
time during the Forbearance Period by the sum of four amounts, to-wit: the
"Principal Payoff", the "Accrued Interest", the "Late Fee" and "The General
Damages".
(a) The "Principal Payoff" will not change during times pertinent
to this Agreement and is in the amount of SIX HUNDRED
FORTY-SEVEN THOUSAND TWO HUNDRED SIXTY-NINE and 71/100
($647,269.71) DOLLARS.
(b) The "Accrued Interest" reflects interest on the principal
prior to November 9, 2001 in the amount of TWELVE THOUSAND
THREE HUNDRED EIGHT-FOUR and 01/100 ($12,384.01) DOLLARS,
plus interest in the amount of ONE HUNDRED SIX and 40/100
($106.40) DOLLARS per day from November 9, 2001 to the
Maturity Date.
(c) The "Late Fee" is subject to change depending upon the date
on which the Principal Payoff is paid.
(i) If the Principal Payoff amount is paid before July
15, 2002 then the Late Fee is in the amount of ONE
THOUSAND THREE HUNDRED TWENTY THREE and 32/100
($1323.32) DOLLARS.
(ii) At 12:01 a.m. on July 15, 2002 the Late Fee shall
become ONE THOUSAND FOUR HUNDRED EIGHTY-TWO AND
92/00 ($1,482.92) DOLLARS and will remain that
amount until July 15, 2002.
(iii) At 12:01 a.m. on August 15, 2002 the Late Fee will
increase to ONE THOUSAND SIX HUNDRED FORTY TWO and
52/100 ($1,642.52) DOLLARS and will remain that
amount until September 15, 2002.
(d) The "General Damages" will not change during times pertinent
to this Agreement and are in the amount of SEVENTY THOUSAND
and no/100 ($70,000.00) DOLLARS.
If the above-referenced amounts (consisting of the Principal Payoff,
the Accrued Interest, the Late Fee, and the General Damages) are not
paid-in-full before the Maturity Date, then Maker shall owe to Payee the sum of
$761,000.00, as provided herein, less any amounts actually paid by, or on
behalf of, Maker during the Forbearance Period.
It is hereby expressly agreed that should Maker fail to satisfy its
obligations hereunder on or prior to the Maturity Date, then the $761,000.00
principal amount of this Note shall, at the option of Holder and without notice
or demand to Maker, at once become due and payable and may be collected
forthwith, regardless of the stipulated date of maturity. Interest shall accrue
on the outstanding principal balance of this Note from the date of any default
hereunder (the sixty-first (61st) day after execution of this Note) and for so
long as such default continues, at the rate equal to eleven percent (11%) per
annum. Time is of the essence of this Note. Maker agrees to pay all costs and
expenses of collection of the indebtedness evidenced by this Note which, in the
event that this Note or any part thereof shall be collected by or through an
attorney-at-law, shall include reasonable attorneys' fees and costs.
Presentment for payment, demand, protest and notice of demand,
dishonor, protest and non-payment and all other notices are hereby waived by
Maker. No failure to accelerate the debt evidenced hereby by reason of default
hereunder, acceptance of a past due installment, or indulgences granted from
time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
of acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of
the State of Alabama; and Maker hereby expressly waives the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of the time for the payment of this Note or any
installment due hereunder, made by agreement with any person now
or hereafter liable for the payment of this Note, shall operate to release,
discharge, modify, change or affect the original liability of Maker under this
Note, either in whole or in part, unless ▇▇▇▇▇▇ agrees otherwise in writing.
This Note may not be changed orally, but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
This Note is intended as a contract under and shall be construed and
enforced in accordance with the laws of the State of Alabama.
If from any circumstances whatsoever, fulfillment of any provision of
this Note or of any other instrument evidencing or securing the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then, the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no event shall any
action be possible under this Note or under any other instrument evidencing or
securing the indebtedness evidenced hereby, that is in excess of the current
limit of such validity, but such obligation shall be fulfilled to the limit of
such validity.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether by voluntary action of the parties or by operation of law.
IN WITNESS WHEREOF, ▇▇▇▇▇ has executed this Note under seal as of the
date first above written.
Maker:
AUTOMATIC GAS & APPLIANCE CO., INC.
Witness:
(Seal)
------------------------------ -----------------------------
Address:
---------------------------
-----------------------------------
-----------------------------------
-----------------------------------
EXHIBIT "C"
UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency
whereof are hereby acknowledged by the undersigned, ____________________, an
individual presently operating in the State of Alabama (hereinafter referred to
as "GUARANTOR"), and for the purpose of seeking to induce First Federal of the
South, with an office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as "LENDER"), to extend a Promissory Note to or
for the benefit of AUTOMATIC GAS & APPLIANCE CO., INC., an Alabama corporation
(hereinafter referred to as "BORROWER"), said Promissory Note being executed in
connection with that certain Settlement Agreement between the parties of even
date, which Promissory Note and Settlement Agreement will be to the direct
interest and advantage of Guarantor, Guarantor does hereby unconditionally,
absolutely and irrevocably guarantee to Lender and its successors,
successors-in-title and assigns the full and prompt payment, in lawful money of
the United States, when due, whether by acceleration or otherwise, with such
interest as may accrue thereon, either before or after maturity thereof, of any
and all indebtedness and/or obligations of Borrower owing to Lender (including,
but not limited to, the repayment to Lender of all sums which may be presently
due and owing and of all sums which shall in the future become due and owing
from Borrower), arising under that certain Promissory Note (the "Note"),
executed by ▇▇▇▇▇▇▇▇ to order of Lender in the original principal amount of
$761,000.00, dated of even date herewith, pursuant to which ▇▇▇▇▇▇ has agreed
to extend credit to Borrower in the amount of $761,000.00, together with any
renewals, modifications, consolidations and extensions of the Note.
The terms "indebtedness" and "obligations" shall have the same meaning
generally ascribed to them, expressly or by implication, in the Promissory Note
dated even date herewith by and between Borrower and Lender, whether recovery
upon such obligations hereafter becomes barred by any statute of limitations,
discharged in bankruptcy or such indebtedness may be or hereafter becomes
otherwise unenforceable, and include Borrower's prompt, full and faithful
performance, observance and discharge of each and every term, condition,
agreement, representation, warranty, undertaking and provision to be performed
by Borrower under the Note (the "OBLIGATIONS"). Guarantor does hereby agree
that if any sum or sums of money are not paid by Borrower in accordance with
the terms of the Note, or if any and all sums which are now or may hereafter
become due from Borrower to Lender under the Note are not paid by Borrower in
accordance with their terms, Guarantor will immediately make such payments.
Guarantor further agrees to pay Lender all costs and expenses of collection in
connection with the enforcement of the Obligations or any portion thereof or
the enforcement of this Guaranty, including without limitation reasonable
attorneys' fees actually incurred with respect to any collection by or through
an attorney.
This Unconditional Guaranty of Payment and Performance (this
"GUARANTY") is a continuing guaranty which shall remain effective during the
term of the Note and while amounts
remain owing the lender and relates to any Obligations, including those which
arise under successive transactions which shall either cause Borrower to incur
new Obligations, continue the Obligations from time to time, or renew the
Obligations after they have been satisfied. Any payment by any other guarantor
shall not reduce Guarantor's maximum obligation hereunder but shall only reduce
the outstanding Obligations at such time.
Guarantor hereby consents and agrees that Lender may at any time, and
from time to time, without notice to or further consent from Guarantor, either
with or without consideration, surrender any property or other security of any
kind or nature whatsoever held by it or by any other person, firm or
corporation on its behalf or for its account, securing any indebtedness or
liability hereby guaranteed; substitute for any collateral so held by it other
collateral of like kind, or of any kind; modify the terms of the Note or any
Obligations; extend or renew the Note or any Obligation for any period; grant
releases, compromises and indulgences with respect to the Note and to any
persons or entities now or hereafter liable thereunder or hereunder; release
Guarantor or any other guarantor or endorser of the Note; or take or fail to
take any action of any type whatsoever. No such action which Lender shall take
or fail to take in connection with the Note, or any one of them, or any
security for the payment of the indebtedness of Borrower to Lender or for the
performance of any Obligations or undertakings of Borrower, nor any course of
dealing with Borrower or any other person, shall release Guarantor's
obligations hereunder, affect this Guaranty in any way or afford Guarantor any
recourse against Lender. The provisions of this Guaranty shall extend and be
applicable to all renewals, amendments, extensions, consolidations and
modifications of the Note and any and all references herein to the Note shall
be deemed to include any such renewals, extensions, amendments, consolidations
or modifications thereof. This Guaranty unconditionally guarantees the
performance of all Obligations to ▇▇▇▇▇▇ made on behalf of Borrower by any
party designated under the Note.
Guarantor hereby subordinates any and all indebtedness of Borrower now
or hereafter owed to Guarantor to all indebtedness of Borrower to Lender, and
agrees with Lender that Guarantor shall not demand or accept any payment of
principal or interest from Borrower, shall not claim any offset or other
reduction of Guarantor's obligations hereunder because of any such indebtedness
and shall not take any action to obtain any of the security described in and
encumbered by the Note; provided, however, that, if Lender so requests, such
indebtedness shall be collected, enforced and received by Guarantor as trustee
for Lender and be paid over to Lender on account of the indebtedness of
Borrower to Lender, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty.
Notwithstanding the provisions of this paragraph, for so long as no default
exists under the Note, Guarantor may receive any and all payments due to him
from Borrower in accordance with the provisions of agreements between Borrower
and Guarantor evidencing indebtedness owed by Borrower to Guarantor. Upon the
occurrence of a default, the subordination by Guarantor contained herein shall
be complete and no further payment shall be permitted to be made to Guarantor
by Borrower until such time as the default is cured or all indebtedness and
obligations owed by Borrower to Lender are paid in full, satisfied and
discharged.
Guarantor hereby waives and agrees not to assert or take advantage of:
(a) the defense of the statute of limitations in any action hereunder or for
the collection of the indebtedness or the performance of any obligation hereby
guaranteed; (b) any defense that may arise by reason of the
2
incapacity, lack of authority, death or disability of Guarantor or any other
person or entity, or the failure of Lender to file or enforce a claim against
the estate (either in administration, bankruptcy, or any other proceedings) of
Borrower or any other person or entity; (c) any defense based on the failure of
Lender to give notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the
part of any person whomsoever, in connection with any Obligation hereby
guaranteed; (d) any defense based on an election of remedies by Lender which
destroys or otherwise impairs any subrogation rights of Guarantor or the right
of Guarantor to proceed against Borrower for reimbursement, or both; (e) any
defense based upon failure of Lender to commence an action against Borrower;
(f) any requirement of acceptance or notice of acceptance of this Guaranty by
▇▇▇▇▇▇; (g) any requirement of notice of presentment and demand for payment of
any of the indebtedness or performance of any of the obligations hereby
guaranteed; (h) any requirement of protest and notice of dishonor or of default
to Guarantor or to any other party with respect to the indebtedness or
performance of Obligations hereby guaranteed; (i) any and all other notices
whatsoever to which Guarantor might otherwise be entitled; (j) any defense
based upon lack of due diligence by ▇▇▇▇▇▇ in collection, protection or
realization upon any collateral securing the indebtedness; and (k) any defense
that the Obligations were discharged in a bankruptcy proceeding of Borrower, or
any other guarantor, to which Guarantor might otherwise be entitled. Guarantor
further waives and forever renounces any and all rights of subrogation,
indemnity and reimbursement or other, similar rights to enforce any remedy
which Guarantor, as subrogee, assignee or otherwise, now has or may hereafter
have, but for this provision, against Borrower, and waives any benefit of, and
any right to participate in, any security or claim now or hereafter held by
Lender.
This is a guaranty of payment and performance and not of collection.
The liability of Guarantor under this Guaranty shall be direct and immediate
and not conditional or contingent upon the pursuit of any remedies against
Borrower or any other person, nor against securities or liens available to
Lender, its successors, successors-in-title, endorsees or assigns. Guarantor
waives any right to require that an action be brought against any borrower or
any other person or to require that resort be had to any security or to any
balance of any deposit account or credit on the books of Lender in favor of
Borrower or any other person. In the event of a default under the Note, Lender
shall have the right to enforce its rights, powers and remedies thereunder or
hereunder or under any other instrument now or hereafter evidencing, securing
or otherwise relating to the transactions contemplated by the Note, including
but not limited to, those provided in the Settlement Agreement and Consent
Judgment, of even date, in any order, and all rights, powers and remedies
available to Lender in such event shall be non-exclusive and cumulative of all
other rights, powers and remedies provided thereunder or hereunder or by law or
in equity. Accordingly, Guarantor hereby authorizes and empowers ▇▇▇▇▇▇, at its
sole discretion, and without notice to Guarantor, to exercise any right or
remedy which Lender may have, including, but not limited to, judicial
foreclosure, exercise of rights of power of sale, acceptance of a deed or
assignment in lieu of foreclosure, appointment of a receiver to collect rents
and profits, exercise of remedies against personal property, or enforcement of
any assignment of leases, as to any security, whether real, personal or
intangible. If the indebtedness guaranteed hereby is partially paid by reason
of the election of ▇▇▇▇▇▇, its successors, endorsees or assigns, to pursue any
of the remedies available to Lender, or if such indebtedness is otherwise
partially paid, this Guaranty shall nevertheless remain in full force and
effect, and Guarantor shall remain liable for
3
the entire balance of the indebtedness guaranteed hereby, even though any
rights which Guarantor may have against Borrower may be destroyed or diminished
by the exercise of any such remedy. Until all of the Obligations of Borrower to
Lender have been paid and performed in full, Guarantor shall have no right of
subrogation to Lender against Borrower, and Guarantor hereby waives all rights
to enforce any remedy which Lender may have against Borrower, and any rights to
participate in any security for the indebtedness.
Guarantor hereby waives, renounces and agrees not to assert, to the
fullest extent permitted by law, any and all rights, claims or causes of
action, whether at law, in equity, by agreement or otherwise, including,
without limitation, for subrogation, indemnification, reimbursement,
contribution, payment or any other claim, cause of action, right or remedy in
favor of Guarantor against Borrower or any other person or entity primarily,
contingently, secondarily, directly or indirectly liable on all or any part of
the Obligations, or against any collateral or other security for the
Obligations, that otherwise would arise out of or result from any payment by
Guarantor to Lender under or pursuant to this Guaranty, notwithstanding the
manner or nature of such payment, including but not limited to (a) direct
payment by Guarantor to Lender, (b) set-off by Lender against any liability or
deposit owed by Lender to Guarantor, (c) recovery by Lender against Guarantor
or any property of Guarantor as the result of any security interest, judgment,
judgment lien, or legal process, (d) application of the proceeds of any
disposition of all or any part of any collateral pledged by Guarantor to the
payment of all or any part of the Obligations or (e) conveyance of all or any
part of any such collateral to Lender in satisfaction of all or any part of the
Obligations. The waivers set forth herein are intended by both Guarantor and
Lender to be for the benefit of Borrower, and such waivers shall be enforceable
by Borrower, or any other person or entity primarily, contingently,
secondarily, directly or indirectly liable on all or any part of the
Obligations, or their respective successors or assigns, and shall be an
absolute defense to any action by Guarantor against Borrower or any other party
or to any recourse against any of their assets which arises out of or results
from any payment by Guarantor to Lender under or pursuant to this Guaranty.
This Guaranty is irrevocable and shall continue in full force and
effect until ▇▇▇▇▇▇▇▇'s Obligations are fully paid, performed and satisfied.
Borrower's Obligations shall not be considered fully paid, performed and
satisfied unless and until all payments by Borrower to Lender are no longer
subject to any right on the part of any person whomsoever, including but not
limited to Borrower, Borrower as debtor-in-possession, and/or any trustee in
bankruptcy to set aside such payments, or to seek to recoup the amount of such
payments or any part thereof. The foregoing shall include, by way of example
and not by way of limitation, all rights to recover preferences voidable under
Title 11 of the United States Code. In the event that any such payments by
Borrower to Lender are set aside after the making thereof, in whole or in part,
or settled without litigation, to the extent of such settlement, all of which
is in the discretion of Lender, Guarantor shall be liable for the full amount
Lender is required to pay, plus reasonable costs, interest, attorneys' fees and
any and all expenses which Lender paid or incurred in connection therewith.
No delay or failure of Lender in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by Lender
of any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy.
4
Guarantor hereby authorizes ▇▇▇▇▇▇, without notice to Guarantor, to
apply all payments and credits received from Borrower or from Guarantor or
realized from any security in such manner and in such priority as Lender in its
sole judgment shall see fit to the indebtedness, Obligations and undertakings
which are the subject of this Guaranty.
The books and records of ▇▇▇▇▇▇ showing the accounts between ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ shall be admissible in evidence in any action or proceeding hereon
as prima facie proof of the items set forth therein.
Guarantor acknowledges that this Guaranty and the Note were
negotiated, executed and delivered in the State of Alabama and shall be
governed and construed in accordance with the internal law of the State of
Alabama (excluding the laws of conflicts).
The validity of this Guaranty, its construction, interpretation, and
enforcement and the rights of Guarantor and Lender shall be determined under,
governed by and construed in accordance with the internal laws of the State of
Alabama, without regard to principles of conflicts of law. Guarantor agrees
that all actions or proceedings arising in connection with this Guaranty shall
be tried and litigated only in the State Courts located in the County of
Talladega, State of Alabama, the Federal courts whose venue includes the County
of Talladega, State of Alabama, or at ▇▇▇▇▇▇'s sole option or, in any other
court in which Lender shall initiate legal or equitable proceedings and which
has subject matter jurisdiction over the matter in controversy. Guarantor
waives, to the extent permitted under applicable law, the right to a trial by
jury and any right Guarantor may have to assert the doctrine of "forum non
conveniens" or to object to venue to the extent any proceeding is brought in
accordance with this paragraph. Guarantor represents and warrants that no
representative or agent of ▇▇▇▇▇▇'s has represented, expressly or otherwise,
that Lender will not, in the event of litigation, seek to enforce this right to
jury waiver. Guarantor acknowledges that ▇▇▇▇▇▇ has been induced to enter into
this Guaranty by, among other things, the provisions of this paragraph.
Nothing contained herein, however, shall prevent Lender from bringing
any action or exercising any rights against any security and against Guarantor
personally, and against any property of Guarantor, within any other state.
Initiating such proceeding or taking such action in any other state shall in no
event constitute a waiver of the agreement contained herein that the law of the
State of Alabama shall govern the rights and Obligations of Guarantor and
Lender hereunder or of the submission herein made by Guarantor to personal
jurisdiction within the State of Alabama.
As security for the indebtedness and obligations of Guarantor
hereunder, Guarantor hereby transfers and conveys to Lender any and all
balances, credits, deposits, accounts, items and monies of Guarantor now or
hereafter in the possession or control of or otherwise with Lender (or any
affiliate of Lender), and Lender is hereby given a lien upon, security title to
and a security interest in all property of Guarantor of every kind and
description now or hereafter in the possession or control of Lender (or any
affiliate of Lender) for any reason, including all dividends and distributions
on or other rights in connection therewith. Lender may, without demand or
notice of any kind, at any time, or from time to time, when any amount shall be
due
5
and payable hereunder by ▇▇▇▇▇▇▇▇▇, appropriate and apply toward the payment of
such amount, and in such order of application as Lender may from time to time
elect, any property, balances, credits, deposits, accounts, items or monies of
Guarantor in the possession or control of Lender (or any affiliate of Lender)
for any purpose.
This Guaranty may not be changed orally, and no obligation of
Guarantor can be released or waived by Lender or any officer or agent of
▇▇▇▇▇▇, except by a writing signed by a duly authorized officer of the Lender
and bearing the seal of Lender.
Any and all notices, elections or demands permitted or required to be
made under this Guaranty shall be in writing, signed by the party giving such
notice, election or demand, and shall be delivered or sent by registered or
certified United States Mail, postage prepaid, to the other party at the
address set forth below, or at such other address within the continental United
States of America as may hereafter be designated by writing. The effective date
of such notice shall be the date of delivery. For the purposes of this
Guaranty:
The address of Lender is:
First Federal of the South
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
The address of Guarantor is:
The provisions of this Guaranty shall be binding upon Guarantor and
his legal representatives and assigns and shall inure to the benefit of ▇▇▇▇▇▇,
its successors, and successors-in-title, legal representatives and assigns.
This Guaranty shall in no event be impaired by any change which may arise by
reason of the dissolution of Borrower.
If from any circumstances whatsoever, fulfillment of any provisions of
this Guaranty, at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then ipso facto the obligation to be
fulfilled shall be reduced to the limit of such validity, so that in no event
shall any exaction be possible under this Guaranty that is in excess of the
current limit of such validity, but such obligation shall be fulfilled to the
limit of such validity. The provisions of this paragraph shall control every
other provision of this Guaranty.
This Guaranty is assignable by ▇▇▇▇▇▇ to any party to whom the Note is
validly assigned, and any such assignment hereof or any transfer or assignment
of the Note or portions thereof by Lender shall operate to vest in any such
assignee all rights and powers herein conferred upon and granted to ▇▇▇▇▇▇.
▇▇▇▇▇▇ shall promptly give notice to Guarantor of any assignment of this
Guaranty.
6
IN WITNESS WHEREOF, the undersigned has executed this Guaranty under
seal as of the _____ day of June, 2002.
Witness:
(Seal)
------------------------------ -----------------------------
-----------------------------------
SSN:
-------------------------------
7
